While diplomats lack optimism about reaching a climate deal, that hasn’t stopped speculators from diving headlong into the carbon markets.
In advance of the Copenhagen talks, EU carbon emissions futures rose 3 percent on Dec. 3, in European trading markets.
Banks have been buying more futures, reports Reuters.
EU allowances for Dec. 14 delivery rose to about $21.10 a ton, a level last reached Nov. 10.
Carbon traders say that banks are building their positions, in the event that the Copenhagen talks lead to more stringent emissions reduction targets.
Many carbon allowances come in exchange for investing in forest preservation projects.
Brazil, which fears that it will be restricted in how it uses its forest resources, is pushing for any climate change accord in Copenhagen to limit the percentage of carbon offsets that industrialized nations can purchase from forest projects, reports Bloomberg. Brazil has the world’s largest tropical forest in the Amazon.
Brazil will propose at the Copenhagen talks that rich nations can meet only a maximum of 10 percent of their emissions cuts through the purchase of forest carbon offsets.